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Food for ThoughtFor a safe, smart way to invest in China, Jim Cramer recommended Yum! Brands ( YUM) Tuesday on his "Mad Money" TV show. Yum!, which owns Taco Bell, Pizza Hut and Kentucky Fried Chicken, may have saturated the U.S. market, said Cramer, but it has far from saturated the market in China. The company has 2280 stores in China, said Cramer, and he expects China to generate 35% of Yum!'s growth through 2007. Additionally, in 2004, 15% of Yum!'s operating profit came from China, said Cramer. By 2007, Cramer expects that number to be 25%. In response to a question about Starbucks ( SBUX) as a play on China, Cramer said the company doesn't yet have the critical mass necessary to see a lot of benefit from China. However, he expects Starbucks to be a China play in the future. Commenting on restaurant stocks in the U.S., Cramer reiterated his bullishness on McCormick & Schmick's Seafood Restaurant ( MSSR) and Ruth's Chris Steak House ( RUTH).
Land GrabFor the first time in 19 years, the real estate prices in Japan are rising, said Cramer. The situation is reminiscent of the U.S., which came out of a real estate depression in 1991. At that time, Cramer made a lot of money investing in Citibank. The Citibank of Japan is Mitsubishi UFJ Financial Group ( MTU), said Cramer. Although MTU's stock looks expensive and appears to have already bottomed, that "doesn't mean you missed most of the move," said Cramer. If Japan's real estate market continues to recover, more and more people will be taking out real estate loans, he said. MTU's earnings should continue to grow, and the stock won't look so expensive, he said. "If my restrictions would let me, I'd be buying some MTU."
In response to a question about Korea, Cramer said the Korea Fund ( KF) is "absolutely right" here. He would endorse KF as a trade and MTU as an investment.
Takeover TalkWith the recent slide in oil stocks, investors seem to have forgotten that "so much of oil is about Chinese demand," said Cramer, "and that isn't slacking at all." Cramer pointed to the recent acquisition attempt by Chinese oil company CNOOC ( CEO) to buy Unocal in which CNOOC was willing to pay up to $9.25 a barrel for proven reserves, said Cramer. Cramer believes CNOOC is still looking to make an acquisition, and "I'm betting that's going to happen," he said. The three oil stocks that "might be most attractive on a valuation basis," said Cramer, are Suncor Energy ( SU), Petrobras Energia Participaciones ( PZE) and Occidental Petroleum ( OXY). Based on recent stock prices, Suncor's reserves are valued at about $5.50 a barrel, said Cramer. Petrobras' reserves are valued at about $7.10 a barrel. Occidental, while not as cheap on a reserve basis, owns a "gigantic chemical business," said Cramer, who believes that Occidental is the "most likely target for another CNOOC takeover attempt." Occidental's stock is "too cheap in the $70s," he said. OXY ended the regular trading session Tuesday at $78.88. Donny Deutsch, advertising executive and host of CNBC's "The Big Idea with Donny Deutsch," joined Cramer as a guest on the show to talk about advertising. Duetsch said smart advertising holding companies such as Omnicom Group ( OMC) and Interpublic ( IPG) will be good long-term investments, but they "need to get their act together."
BullishCramer was bullish on Google ( GOOG), Duke Energy ( DUK), Powerwave Technologies ( PWAV), Automatic Data Processing ( ADP), URS ( URS), Lucent Technologies ( LU), Sirius Satellite Radio ( SIRI), H&R Block ( HRB), Altria ( MO), PetroQuest Energy ( PQUE), Capital One Financial ( COF), Joy Global ( JOYG), Medco Health Solutions ( MHS), Darden Restaurants ( DRI), American Express ( AXP), Cendant ( CD), Principal Financial Group ( PFG), Prudential Financial ( PRU), MetLife ( MET), Cypress Semiconductor ( CY), LSI Logic ( LSI), Texas Instruments ( TXN) and TurboChef Technologies ( OVEN).
BearishCramer was bearish on Jefferson-Pilot ( JP), Andrew ( ANDW), Paychex ( PAYX), El Paso ( EP), Williams Scotsman International ( WLSC), AmeriCredit ( ACF), Warren Resources ( WRES), NTT DoCoMo ( DCM) and KFX ( KFX).
|1.||Pigs Get Slaughtered||2.||It's OK to Pay the Taxes|
|3.||Don't Buy All at Once||4.||Buy Damaged Stocks|
|5.||Diversify to Control Risk||6.||Do Your Homework|
|7.||Don't Panic||8.||Buy Best-of-Breed|
|9.||Defend Some Stocks||10.||Don't Bet on Bad Stocks|
|11.||Own Fewer Names||12.||Cash Is for Winners|
|13.||No Regrets||14.||Expect Corrections|
|15.||Know Bonds||16.||Don't Subsidize Losers|
|17.||No Room for Hope||18.||Be Flexible|
|19.||Quit When Execs Do||20.||Patience Is a Virtue|
|21.||Be a TV Critic||22.||When to Wait 30 Days|
|23.||Beware the Hype||24.||Explain Your Picks|
|25.||Find the Bull Market|